An Irvine condominium development that has seen construction work stopped for the better part of a year will be converted into an apartment complex following a sale by its lender.
Dupont Lofts, a 115-unit condo project that sits at the southwest corner of Dupont Drive and Von Karman Avenue, a few blocks from John Wayne Airport, was acquired last week by Palo Alto-based Essex Property Trust Inc., an apartment developer and owner.
Essex paid $27 million, or about $235,000 per unit, for the development. It was sold by Los Angeles-based Cathay Bank in an all-cash deal.
Cathay had taken the complex back from Los Angeles-based West Millennium Homes Inc. last year, after the project’s original developer defaulted on a construction loan.
West Millennium filed for Chapter 7 bankruptcy in mid-2009. The company had planned several housing projects in Irvine and Anaheim during the housing market’s better days.
Construction on an abandoned Anaheim condo project that West Millennium had been working on—a 92-home development on Katella Avenue in the Platinum Triangle—was turned over to San Diego-based Wermers Cos. early last year amid the developer’s financial issues.
Another Platinum Triangle project that West Millennium had been the initial developer on, a 370-condo project on East Orangewood Avenue, was listed as bank-owned by the city late last year.
The Dupont Lofts project is about 85% complete, according to Essex officials. It will take another $6 million and six months of construction to complete the development, the company estimates.
Essex plans to run the four-story project as apartments. The real estate investment trust owns about a dozen apartment complexes in Orange County, and it has about 27,000 apartments in total on the West Coast.
At a sales price of $157 per square foot, the company thinks it’s getting a deal on the property.
It’s “one of the few deals we have seen of this nature in the marketplace,” said Craig Zimmerman, Essex’s executive vice president of acquisitions, in a statement.
Through November, existing OC apartment complexes traded hands at an average of $142 per square foot, according to New York-based Real Capital Analytics Inc.
The replacement cost of the property is about $60 million, according to John Whitmire, a broker with Beverly Hills-based Bel Air Capital Advisors Corp., which represented the buyers in the sale.
Gary Cook of Cathay Bank represented the sellers.
Most of the $6 million Essex plans to put into the property will be spent on interior work, according to the company.
To date, there also appears to have been little exterior or landscaping work done at the fenced-in site. Other than that of security personnel, there’s been little activity at the project in the past year.
Luxe Apartments
The higher-quality finishes put into the property when it was still eyed as a condo project should allow the company to get “premium” rents once the site opens, according to Zimmerman.
Apartments will run from 943 square feet to 2,300 square feet; every unit includes 11-foot ceilings and a fireplace, among other touches.
The project sits in a commercial area dominated by small and midsize office buildings, several of which had been eyed as potential sites for housing redevelopment during better times.
Most of those projects were put on hiatus during the downturn.
Across the street from the site is the corner of the block-long campus for Irvine-based drug maker Allergan Inc.
Allergan has thwarted housing development closer to its campus by snatching up more than $50 million of offices and land that directly border its headquarters in the past few years.
The Dupont Lofts project is the closest residential project that’s been built near Allergan’s campus to date.
At the opposite end of Allergan’s campus is a larger mothballed condo project, Lennar Corp.’s Central Park West project.
Sales at the two high-rises at the edge of the project are ongoing, but a plan for rolling out sales at the midrise condos at the former industrial site has yet to be announced.
